Amway is ordered to cease and desist from making income claims, and from price fixing.
Amway escaped prosecution as an illegal pyramid scheme due to supposed enforcement of the rules requiring
retail sales. The 70% rule was to ensure that a majority of the product was retailed to customers.

"Because of the extensive and extremely adverse publicity associated
with Glenn Turner's "Dare to be Great" operation -- an operation based
primarily on the sale of motivational tapes -- it must be recognized
that any multi-level sales plan which unduly emphasizes sales of
motivational literature or tapes is likely to attract the attention of
enforcement authorities!!!"

Hogan and HartsonAmway's outside counsel
in a 28 page opinion about the tools business

"The motivation business could not exist without the Amway business, yet in all seriousness,
these Diamonds feel that their Amway business is impossible without the motivational business. It has been clearly stated to
me by more than one Diamond in this group that if anything is done that negatively affects the tools business, they would leave
the business".....

"Although the Amway business is legal (no question), the tool business is not (my conclusion)"

Ed Postma,
Amway Business Conduct Manager

"Subsequent legal evaluations disclosed that the disproportionate (to Amway) sales, intensity and solicitation of
these "tools/systems" are illegal, per se, under several U.S. federal and state laws."

"The structure and function of major organized crime groups, generally
consisting of associated enterprises engaging in patterns of legal and illegal activity, was
the prototype forming the basis for federal and state racketeering legislation that I have
been involved in drafting. The same structure and function, with associated enterprises
engaging in patterns of legal and illegal activity, is found in the Amway business."

Quixtar has been a member of the Direct Selling
Association since 1999. The Direct Selling Association is working to change the pyramiding laws with
HR1220 so that Quixtar's business practices will be
completely legalized. Under the new bill product based pyramid schemes would be legalized.

The Wisconsin Attorney General charged numerous Wisconsin Amway distributors with unrealistic and
exaggerated income claims as well as failure to disclose the identity of Amway and the nature of the opportunity being offered.
An analysis of Wisconsin State direct distributors revealed that they had an average net loss of $918/year.

Amway pleaded guilty in Canada to criminal fraud for tax evasion in 1983.
Amway had been evading duties and taxes by using false invoices to
misrepresent the value of its products being shipped across the border.

Amway pays $100,000 fine for violating 1979 order about making
income claims. A 1979 Commission decision resolved FTC charges that Amway's claims about the amount of
money distributors are likely to earn had the capacity to deceive potential distributors. The order accompanying that
decision prohibits Amway from misrepresenting the amount of profit, earnings or sales its distributors are likely to achieve.
The order also requires that whenever Amway makes above-average earnings or sales claims, it must also dis close clearly
and conspicuously either the average earnings of all distributors or the percent of distributors who actually earn the amount
claimed.

The Corporation now discloses that the average renewing, active IBO earns just $115 /month.

Amquix.info's Additions to Dateline NBC

Chris Hanson: Reporter, Dateline NBC

Video
Part 1
Part 2

Complete Audio and Video from the May 7, 2004 Dateline Show.

Since Dateline had so much information and so little time they had to
leave some information out of the show.
Dateline really did not highlight Amway/Quixtar's 20+ year knowledge of the abuses in the
Business Support Materials (tools) business and the illegal business model
of "buying for yourself".

Rich DeVos: Co-Founder, Amway Corporation
The rest of the story....

The show did not use any of Rich DeVos's sound bytes from his famous
"Directly Speaking Tapes", which are highlighted at the bottom
of this page.

The following is a brief history of the tools scam and Amway/Quixtar's long time knowledge
of its illegality, which Dateline did not mention on the show.

The History of the Tools Scam

Before the Yager/Britt tools systems emerged in Amway, the corporation was already
sponsoring seminars and functions. Motivational books had already found their place early in the business.
In the late 1970's when the low cost and reliable compact cassette tape format replaced the 8-track format, the final
and most profitable element of BSM's triad was put into place. The king-pin distributors
took over providing motivational seminars and functions from the corporation..

The compact cassette tape format became so popular that the heads of the two largest systems,
Dexter Yager, and Bill Britt each started companies devoted to reproducing and packaging
pre-recoreded cassette tapes for their growing Amway downlines.
Dexter Yager runs I.C.C.A, and Bill Britt runs American Media International (AMI).

Rich DeVos takes a stand against the "systems"

Glen Turner's "Dare to be great"
scheme focusing totally on the sale of motivational supplies, caught the eye of state and federal
regulators. At this time the FTC had also refined the definition of illegal pyramid schemes
to include plans, which had little or no sales to normal retail customers.
Such plans are called "product based pyramids".
These legal developments
as well as distributors' complaints about abuses within the systems caught Amway's attention.
Numerous internal memos were written concerning the illegality of the tools systems.

On January 19th, 1983 Ed Postma wrote an analysis of how the "systems" worked.
It details how the "system" is used to isolate
distributors and to create a dependencey on the system. It highlights that the
profitability from these systems was far greater than the profitability from the Amway
products business. In the same month Amway C-founder, Rich DeVos, produced the first of two "directly speaking tapes"
sent only to direct distributors and above.
This website is still searching for a copy of Directly speaking I.
If you have one please write me.

Early in 1983 the company added BV on the corporation produced tapes, allowing all distributors
to participate in income from tape sales. The uproar from this action prompted Rich DeVos to record another
tape in March of 1983 called Directly speaking II.

On April 5, 1983 Amway attorneys met with Yager diamonds and emeralds
at the annual Yager Emerald Club in Miami, Florida.
Many Yager Diamonds expressed their concern that the company was trying to move-in and steal their
lucrative tape business.

The Corporation must live with the "systems"

The publicity from a CBS 60 Minutes expose and the fallout from Rich DeVos's
"Directly Speaking Tapes" contributed to a 25% tumble in Amway sales in 1983.
Amway was faced with its own demise if it continued to take a stand against
the powerful distributor networks. Fortunately for the tools king-pins, the Corporation
gave in and accepted the systems as a necessary evil to Amway's own survival.

In April of 1988, Rich DeVos was questioned and cross-examined on the witness stand as part of the
Setzer vs. Amway suit. The part of DeVos's testimony
is largely a recounting of Amway Corp.'s realization of the problems posed by the tools business, and its
attempts to deal with those problems. DeVos stated under oath that:

Q. What happened in the area of the tools abuses, the private tools abuses addressed at that meeting? DeVos. Well, those abuses continued to this day, There are a variety of people who complain to me
continually about some of those abuses, so that's an ongoing challenge that the organization faces.

Q. And let me ask you this, in your tape there you said that you would expect
that the position that the company is taking, expressed in these various speeches, including the one we
just heard, would be costly to the company; what did you mean by that? DeVos. Well, I said to some of our staff there that I thought that it would cost us a few hundred
million dollars in volume—I think I said $300 million—as we went through a correction phase.

Q. And did it cost $300 million in volume? DeVos. I think we lost upward of $300 million in volume as we tried to go through this
adjustment period.

Q. It is a position that you took in the early part of 1983. Have you
deviated from that position in the Amway Corporation since then, with respect to your Ten Points
and the subject matter contained therein? DeVos. Well, let's just say that we dealt with it the way we did. We did put some people
under notice that they were doing things wrong. We pursued of course re-education but we never
pursued it to its ultimate goal of really nailing anything down. In the meantime,
the volume came down and we started to work at trying to hold the business together but the problem
persisted in any case.

The Corporation's complicity with the systems

Dateline mentioned the suit against the Corporation by Crown IBO Kenny Stewart, Double Diamond
Brig Hart, and Diamond Charlie Schmitz. The suit filed in Missouri alleges the corporation
conspired with and helped certain king pin distributors take over BSM profits from the plaintiffs.
The suit focuses on anti-trust violations between the corporation and the various kingpin distributors within the tools business.

Additionally, Dateline NBC never did mention the Blakey report. Professor Robert
Blakey was instrumental in the drafting of racketeering legislation.

"It is my opinion that the Amway business is run in a manner that is parallel to that of major organized crime groups, in
particular the Mafia." Professor Robert Blakey

Audio Recordings

Rich
DeVos:Co-Founder, Amway Corporation Wholesaling only is an illegal business

Rich
DeVos:
Co-Founder, Amway CorporationAbuse in the Tools Business

Ken
McDonald: Managing Director, Quixtar
Quixtar and the king pins are joined at the hip